In this study a simulation analysis
is applied to address the change in banks liquidity demand due to a shift in
settlement method brought about by adopting Real Time Gross Settlement System.
At the first stage of this research, we use a data generator model along with
some information on the time distribution of coded cheques over a working day
in order to produce intraday flow of payments. Then the output is fed to the
Bank of Finland Payment Settlement Simulator (BoF-PSS) to estimate banks
intraday liquidity needs in Satna. The results indicate the movement towards a
real time gross-settlement system increases the liquidity demand of Iranian
banks in payment system by about 66 percent.